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Considering the year that Borders (BGP) has had, one might think that news of the second-largest bookstore in the country putting its headquarters building up for sale is another death knell. Revenues keep declining, employees are still being laid off (even after five rounds) and Borders' digital moves lag competitors Amazon (AMZN) and Barnes & Noble (BKS). New initiatives, such as selling Build-a-Bear kits alongside books and opening temporary stores in locations that once housed permanent ones, seem like the retail equivalent of Band-Aids on an arterial rupture.

Surely, the sale of Borders' Ann Arbor, Mich., headquarters for almost $18.4 million adds to the persistent rumors of the company's imminent demise. But the truth is more complicated: Borders' financial health is certainly a factor, but the corporate HQ sale is more about the intentions of the building's owner, Agree Realty.
No Impact on Borders

According to AnnArbor.com, the 460,000-square-foot building, which Agree Realty bought in 1996 for nearly $8 million, is one of the largest in the city. That's far more space than Borders needs, having whittled its corporate staff down to approximately 600 employees (an absolute headcount is hard to obtain). Borders has even begun to sublease vacant office space, even as it currently pays about $9.26 million of its annual $500 million in lease obligations to Agree Realty.

Borders spokeswoman Mary Davis confirmed the sale in a statement to DailyFinance, but clarified that the bookseller's long-term lease doesn't expire for another 12 years and "will not be affected" by a potential sale. "In commercial real estate," she notes, "it's common for leased buildings to seamlessly change ownership without tenants or their already-agreed-upon lease terms being impacted."

Indeed, the real estate company already sold one of Borders' superstores, a 38,000 square-foot property in Santa Barbara, Calif., to an undisclosed buyer. While rumors circulate that this store is part of Borders' "Project Phoenix" -- stores whose leases are too expensive to ever turn a profit and are slated for closure -- it remains open.

Local real estate experts told AnnArbor.com that putting the building on the block "appears to be a step toward diversifying a real estate portfolio that's heavy on three major tenants" -- Borders, Walgreens (WAG) with 28 stores, and Kmart (SHLD) with 12. Apparently, Agree Realty wants to reduce its exposure with the bookseller. By putting Borders' HQ up for sale, Agree Realty is signaling that it must put its own future ahead of its tenants', and that some other company is better off owning the building that's home to a company that's busy cleaning up internal messes.